The pound is lower against the euro and the dollar after Bank of England official Adam Posen signaled that the central bank may need to increase its asset purchase program as British economic recovery falters. Posen said yesterday the BoE is not helping the economy by doing nothing and voted for the extension of the bond purchase by 100 billion pounds. So far Bank of England bought 200 billion pounds of bonds in the program that ended in 2010. Sterling was also under pressure on concern Europe’s debt crisis will undermine the recovery in UK as Eurozione is Britain’s major trading partner. Looking ahead to today, employment figures headline the economic calendar, with the expectations for the jobless claims to have risen by 35K in August and the ILO unemployment rate to remain unchanged at 7.9%.
The euro dropped against the dollar during the overnight trade on speculation Greece is nearing default. The single currency depreciated on concern that Greece’s debt concerns will increase borrowing costs for other countries in the region. Greek PM George Papandreou holds a conference call with German Chancellor Angela Merkel and French President Nicolas Sarcozy today to discuss developments in his nation and the euro area. Looking ahead to today, Eurozone Industrial Production headlines the economic calendar with the expectations for the figures to have increased by 1.5% in July after dropping by –0.7% in the previous month.
The dollar gained against the broadly weaker euro but dropped against the yen ahead of the Retail Sales reports scheduled for today that are expected to add further signs of slowdown in the world’s largest economy. The advanced retail sales are expected to have risen only by 0.2% in August after reaching 0.5% in the previous reading. Also scheduled for today is the Producer Price Index, with the expectations for the figures to romaine unchanged at 0.2% from July.